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DATA CAPTURE AND BATCH

DATA ENTRY CONTROLS


OBJECTIVES

1. Examine the relationship between errors, control objectives, and controls


2. Understand the role played by the audit trail in control and audit
3. Determine what constitutes an adequate audit trail
4. Understand why it is important to control transactions prior to processing
5. Identify the purposes of data capture controls, batch data preparation
controls, and batch input controls
Controls Methodology

 Controls Methodology states that the management or the auditor must make a
series of evaluations and determinations before the usefulness of controls can
be defined
 Describes the role of controls in an EDP accounting system
 Describes the impact of application controls on the auditor’s assessment of
control risk in EDP accounting systems

 STEPS
1. Exposures Resulting from Errors and Irregularities
2. Management Control Objectives
3. System Control Objectives
4. Application and General Controls
1st Step: EXPOSURES RESULTING FROM
ERRORS AND IRREGULARITIES
Unreliable Data
 Incorrect source data
 Incorrect translation of source data to a machine –readable medium
 Loss of transaction data during the processing cycle
*Uncorrected erroneous input data may result to erroneous output.

Improper Processing
Loss or Destruction of Assets and Records
Failure to Accomplish Organizational Objectives
Operational Inefficiency
2nd Step: Management Control
Objectives
OBJECTIVE: to reduce errors to an acceptable level

3 Elements of the Control Structure:


1. Control Environment
- pertains to the overall attitude, awareness, and actions of management
toward the control structure
1. Accounting System
2. Control Procedures
3rd Step: SYSTEMS CONTROL
OBJECTIVES
OBJECTIVE: to guide the systems designer in the choice of specific controls for
specific systems
Controls Methodology and Chapter
Organization
1. Prevention Objective
2. Detection Objective
3. Correction Objective
4th Step: Application and General
Controls
AUDIT TRAIL

 An audit trail refers to a situation where it is possible to relate ‘one-to-one’ basis, the original input along
with the final output. The work of an auditor would be hardly affected if “Audit Trail” is maintained i.e. if it
were still possible to relate, on a ‘one-to-one’ basis, the original input with the final output. A simplified
representation of the documentation in a manually created audit trail. For example, the particular credit
notes may be located by the auditor at any time he may wish to examine them, even months after the
balance sheet date. He also has the means, should he so wish, of directly verifying the accuracy of the
totals and sub-totals that feature in the control listing, by reference to individual credit notes. He can, of
course, check all detailed calculations, casts and postings in the accounting records, at any time.
In first and early second generation computer systems, such a
complete and trail was generally available, no doubt , to
management’s own healthy scepticism of what the new machine could be relied upon to achieve – an
attitude obviously shared by the auditor. The documentation in such a trail might again be portrayed as
shown, in an over-simplified way, in Figure I.It is once again clear from the diagram that there is an
abundance of documentation upon which the auditor can use his traditional
symbolsof scrutiny, in the form of coloured ticks and rubber stamps.Specifically:(i)The output itself is as
complete and as detailed as in anymanual
system.(ii)The trail, from beginning to end, is complete, so that alldocuments may be identified by locate
d for purposes of vouching, totalling and cross-referencing.
Any form of audit checking is possible, including depth testing ineither direction.
 Audit trail acts as an application control because it can be used to
diagnose the cause and effect of an error.
 Used by external and internal auditors as the basis for audit tests of
transactions and account balances.
 Permits the tracing of transaction processing